European governments have eased austerity controls over national budgets in an effort to combat the continent’s burgeoning unemployment and stagnant economic growth.
European Union leaders, meeting at a summit in Brussels, late Thursday agreed to allow more room for public investment, even as such countries as France, Spain and Portugal continue to try to rein in deficit spending.
Unemployment has risen sharply in Europe, reaching 11.9 percent in January, and thousands of demonstrators protested in the streets outside the summit against the austerity policies adopted by European governments.
French President Francois Hollande told the summit that “if there is too much austerity, there will be too much unemployment.” He said some “flexibility” is needed to pull the continent’s economy out of a mild recession.
European Council President Herman Van Rompuy said a proper balance needs to be struck between austerity measures and investment to boost economic growth.
“The question is finding the right balance. We will not overcome a debt crisis with more debt, we will not create more jobs if companies have no access to credit. But, neither will we bring back confidence and opportunities if our economies continue to shrink. It is not black and white and nuances matter. As some might say, there are many shades of gray,” Van Rompuy said.
During the three-year European government debt crisis, German Chancellor Angela Merkel has been the face of austerity, demanding that debt-ridden governments impose strict measures to cut their spending.
But she adopted a more conciliatory tone at the summit. She said that stricter spending controls and growth “are not in contradiction, but are mutually reinforcing.”
(Photo: Evangelos Vlasopoulos/sxc.hu)